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No, you have it backwards. Only higher interest rates +strong US Dollar + deflation and depression can wipe out bad debt and prepare us for new and organic economic growth. What you wrote above is nothing more then an illusion. We have bad debts that need to be destroyed; like a hidden wound, these debts need to be exposed to the air, cleaned and treated. Some limbs have to be removed. There is no easy, painless way to do all this; but it must be done.
Destruction of our debts through bankruptcy and default -- using the mechanism that was designed for this action, higher interest rates, and more expensive money -- is the ONLY answer to our current problems.
We enjoyed the party; now we have to pay for the party. What you suggest is cheating and manipulation, you want to cheat on creditors and pay them back in devaluated dollars. America needs healthy Capitalistic System, the same old system that made this country great and prosperous. Japan tried what you are suggesting and they are dying a very slow death because of it -- still dying a very slow death, which began in 1989, heading on 3 decades now. If it doesn't work - then it doesn't work. Bad debt needs to be destroyed. And the inflation of prices that happened from 1983-2001 needs to be reduced and balanced. Deflation is supposed to moderate both price gains and the wealth-gap that happened in the preceding inflation -- and the Fed is spending retiree's and savers money to try to make sure this does not happen.
There will be no real and organic growth in our economy again until we have MANY bankruptcies and defaults -- until we can live with mark-to-market banking accounting again. Are our banks healthy? Return to mark-to-market accounting as see how healthy they really are.
Bankruptcy is not that powerful. The US Government can't go bankrupt. States can't go bankrupt. You can't discharge student loans through bankruptcy. You can preserve a primary residence in bankruptcy, within limits, but not a second home, rental or business.
High interest rates are pretty much inevitable in times of high inflation, because it protects the value of the dollar. Deflation just multiplies debt, and does nothing to balance accounts.
The Fed is completely irresponsible & in all reality experimenting. Listen to Alan Greenspan's testimony where he states that he made a mistake with his entire thesis of free markets will regulate themselves and by his keeping interest too low for too long was a major contributor in the financial crisis. Not all can be blamed on the Fed, removing Glass- Steagal was probably by far one of the largest contributors to our financial instability.
Today the Fed is doing the same thing Greenspan did by keeping rates too low for too long- raise the rates and have the conviction to do what is right long term as opposed to reacting to how wall street reacts. When the economy is heating up is when rates should be raised, when the economy is cooling down then lowered. I do not know how high valuations have to get before the Fed wakes up but if what the OP posted is true, I find it funny how the last meeting Yellen mentioned a familiar tone of irrational exuberance.
Yeah that's true but one cannot forget that the United States, thus far and for a long time now has played by not just a different set of rules but it's entirely own set of rules that even other large countries thus far have not been able to play by. And that is because the United States FED prints the world reserve currency, but this will not continue forever and in fact might be ending sooner than we think. What does this mean for the US and it's people? Everything.
In the world beyond crude partisan fairy tales, reserve currencies are those which national governments themselves choose to hold as part of their official reserves. US dollars are the most widely held reserve currency because of the size and scope of our GDP, the depth of our historical participation in international trade, and the global efficiency of our investment markets. Euros have become the second most widely held reserve currency, while since its inclusion in the IMF's SDR market basket, Chinese Yuan have moved to a distant third place. UK Pounds and Japanese Yen trail behind them, with Canadian and Australian dollars also involved on a regional basis.
I don't think it's ending anytime soon, but it would be awesome for at least 99% of the population if it did.
Well, every economy in the world that has an actual heartbeat either has its own central bank or utilizes the services of one nearby. It's odd don't you think that all this "awesomeness" is universally not recognized in the world?
The Fed is completely irresponsible & in all reality experimenting.
Worthless blabber.
Quote:
Originally Posted by oneslip
Listen to Alan Greenspan's testimony where he states that he made a mistake with his entire thesis of free markets will regulate themselves and by his keeping interest too low for too long was a major contributor in the financial crisis.
That's on Greenspan, not the Fed. A proper Chair would have used the tools at his disposal. Being of a free-market, laissez-faire bent, Greenspan did not. The choice worked out extremely poorly.
Quote:
Originally Posted by oneslip
Not all can be blamed on the Fed, removing Glass- Steagal was probably by far one of the largest contributors to our financial instability.
Changes to Glass-Steagall merely brought the law up to date with what had already become reality. Claims that CRA, GLB, or CFMA were causes of the credit crisis and ensuing Great Recession are awkwardly manufactured attempts to shift blame away from the proximate causes -- badly flawed GOP fiscal, monetary, and regulatory policies.
Quote:
Originally Posted by oneslip
Today the Fed is doing the same thing Greenspan did by keeping rates too low for too long...
The Fed would quite sensibly like to see increases in employment, wages, and inflation. The views of Chairman-to-be Powell are not different from those of Yellen or the rest of the Board of Governors on these matters.
In the world beyond crude partisan fairy tales, reserve currencies are those which national governments themselves choose to hold as part of their official reserves. US dollars are the most widely held reserve currency because of the size and scope of our GDP, the depth of our historical participation in international trade, and the global efficiency of our investment markets. Euros have become the second most widely held reserve currency, while since its inclusion in the IMF's SDR market basket, Chinese Yuan have moved to a distant third place. UK Pounds and Japanese Yen trail behind them, with Canadian and Australian dollars also involved on a regional basis.
I don't know a Swiss Frank, but Swiss francs are not widely enough used as reserves any more to qualify as a reserve currency. They remain important in finance for other reasons though.
Bankruptcy is not that powerful. The US Government can't go bankrupt. States can't go bankrupt. You can't discharge student loans through bankruptcy. You can preserve a primary residence in bankruptcy, within limits, but not a second home, rental or business.
High interest rates are pretty much inevitable in times of high inflation, because it protects the value of the dollar. Deflation just multiplies debt, and does nothing to balance accounts.
States cannot create USD, so they could go bankrupt. I don't believe we the people would allow it though, and would elect for central moneys to come to the rescue if need be.
I don't know a Swiss Frank, but Swiss francs are not widely enough used as reserves any more to qualify as a reserve currency. They remain important in finance for other reasons though.
States cannot create USD, so they could go bankrupt. I don't believe we the people would allow it though, and would elect for central moneys to come to the rescue if need be.
Sort of like the state and local budget support that was included in the 2009 stimulus bill that Republicans whined so painfully over.
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